ManTech International (MANT) Q1 2020 Earnings Call Transcript

ManTech International (MANT)
Q1 2020 Earnings Call
Apr 29, 2020, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, good afternoon, and welcome to the ManTech first-quarter fiscal-year 2020 earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Stephen Vather, vice president, corporate development, and investor relations.

Stephen Vather -- Vice President, Corporate Development, and Investor Relations

Welcome, everyone. Thanks for participating on Mantech's first-quarter call. We hope that everyone is healthy and remaining safe during these uncertain times. We are practicing good social distancing, and as such, we are utilizing a completely virtual approach to our earnings call this afternoon.

Please bear with us if you experience any minor delays or mixed audio quality on the call. Joining me on today's call, we have Kevin Phillips, president and CEO; Judy Bjornaas, executive vice president and CFO; as well as Matt Tait and Rick Wagner, our two group presidents. During this call, we will make statements that do not address historical facts, and thus, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to factors that could cause actual results to differ materially from anticipated results.

For a full discussion of these factors and other risks and uncertainties, please refer to the section entitled Risk Factors in our latest Form 10-K and our other SEC filings. Note, COVID-19 has been included as a risk as it is uncertain what the potential impact could be to our business, and therefore, it could cause our future results to be different than our current estimate. We undertake no obligation to update any of the forward-looking statements made on this call. On today's call, we will discuss some non-GAAP financial measures which we believe provide useful information for investors.

These non-GAAP measures should not be evaluated in isolation or as a substitute for GAAP performance measures. You can find a reconciliation of the non-GAAP measures discussed on this call in our first-quarter earnings release. Following prepared remarks, we will turn the call over to your questions. We recognize there may be many questions.

Please limit yourself to one question. And if you have more than one, please ask your most pressing question first and then reenter the queue. With that, let me hand the call over to Kevin.

Kevin Phillips -- President and Chief Executive Officer

Thanks, Stephen, and good afternoon, everyone. I'd like to begin the call by discussing the COVID-19 pandemic, its impact and how we are managing our business through this national emergency. After that, I will offer an update on ManTech's quarterly performance, followed by some thoughts on the broader market and the environment. First, I want to express our deepest gratitude to the healthcare professionals, first responders, government officials, members of the military and national guard and many others that are on the front lines of battling this pandemic.

Over the last few months, the world has seen unprecedented events. And as you can imagine, the health crisis has become the key national priority for our customers, and it has been receiving our leadership team's full attention. We've been proactive in our planning and response throughout this crisis. Our engagement with employees, customers and partners is very high.

We are in regular communications and have adapted swiftly to the evolving conditions. Throughout this, ManTech has been operating with two key priorities in mind: first, the continued health, safety and well-being of our employees and their families, as well as those of our customers and our partners; second, maintaining continuity and the critical support for our customers and their important missions. In support of these two priorities, ManTech has taken a number of our actions to establish strict social distancing metrics by establishing telework for our employees to the maximum extent possible and by placing restrictions on travel and in-person meetings. We have also established tightened hygiene standards through increased awareness and by working closely with customers to ensure safe workspaces and arrangements for those unable to telework given customer mission needs.

As you know, the defense industrial base is considered part of the critical infrastructure. It is our charter to help address the nation's broader needs during this crisis. Along with those in our industry, we, at ManTech, entered this national emergency supporting federal customers operating under full-year appropriations through September 30. As it relates to our business and workforce in responding to this crisis, our DoD and federal civilian customers have been able to expand the use of telework and establish approaches to shift work and work schedules that minimizes the impact of the COVID emergency on operations.

Those customer missions and requirements most affected by the need for stringent social distancing measures are those that require access to highly classified systems and information, those where the work performed involve significant global and national travel or where supply chain issues may delay material purchases on select programs. While COVID has forced some changes to how we operate, its impact on our business so far has been relatively light. We are thankful to our customers and the federal government at large for recognizing the value and necessity of the defense industrial base to national security. Provisions in the CARES Act enacted in late March, specifically Section 3610, an implementation of guidance provided by OMB, DoD, DNI, DHS and others have made it clear that the intent is to support and maintain the defense industrial base, those supporting critical infrastructure, those assisting key federal health and citizen services needs and the highly skilled and highly cleared workforce supporting the intelligence community.

This guidance affords recovery of the costs related to our workforce that are unable to provide full-time support customer requirements due to workforce safety measures. Looking forward, we are preparing to move toward a more normal operational environment as this national crisis subsides. Currently, the administration and congressional focus appropriately remains on addressing the pandemic and resulting economic implications. As such, our sense is that moving to full operational status will be gradual, and we may be operating an additional portion of FY '21 under continuing resolution.

That said, we believe the agreed-upon two-year budget deal should afford a sound framework for funding levels, excluding additional funding that is established within the emergency funding bills. Now let me shift to our performance in the quarter. On our last call, we provided a strong financial outlook for the year, and we delivered solid Q1 performance. The quarter's performance was marked by healthy revenue growth of 22%, EBITDA growth of 34%, EBITDA margin expansion of 80 basis points and steady operating cash flows of $43 million.

Additionally, we saw considerable hiring in the quarter with onboarding being done virtually in the latter half of March, I want to thank the broader team's vigilance on our customers' missions, which enabled another quarter of outstanding performance. That said, we are slightly tempering expectations for 2020 to factor in uncertainties during this crisis. Judy will walk through the details of our financial performance and revised guidance a little later on the call. We had a solid quarter of contracts as well.

Bookings totaled $1.1 billion, resulting in a 1.8 book-to-bill. New business made up over 90% of Q1 awards, and total backlog grew to $9.3 billion, which was up 11%. Funded backlogs sit at $1.4 billion. The durability and longevity of our backlog gives us good visibility to our revenue.

In response to customer requirements for Q1, proposal and business development activity remained elevated. Our proposals outstanding figure of approximately $7 billion exiting the quarter was strong. We did not see material delays in procurements for most of our business during Q1. We were beginning to see signs that slippage may occur in some areas of the business in the coming quarters.

Our customers have funding, and the requirements remain clear. However, the procurement and contracting processes needed to support near-term COVID-19 contracting actions, as well as anticipated gradual phasing of work schedules back to a normal state may all contribute to delays. As a result, it is possible that adjudications and bookings could experience greater variability. Our company and tested leadership team has supported many urgent needs in fluid operating environments before.

We're committed to supporting our customers' needs through this crisis. Now Judy will walk through the details of our Q1 financial performance and revised outlook. Judy?

Judy Bjornaas -- Executive Vice President and Chief Financial Officer

Thanks, Kevin. We had a strong financial start to the year, and the results exceeded our expectations across all of our key measures. Revenue for Q1 was $611 million, up 22% with over two-thirds of the growth coming organically. Sustained customer demand in the form of new contract wins and growth on existing programs, as well as our strategic acquisitions continued to serve as the major drivers of our growth.

As Kevin mentioned, we had a healthy hiring quarter, and as a result, direct labor remained key to our overall top-line growth. In the quarter, we performed 91% of our work as a prime contractor, and our contract mix was approximately 68% cost-plus, 20% fixed-price and 12% time-and-materials. EBITDA for the quarter was $55 million and grew 34% over Q1 2019. EBITDA margin of 9% outpaced our expectations and represented an 80-basis point improvement year over year.

Margin in the quarter was primarily driven by strong program performance, good award fees, efficient cost management and some nonrecurring items. The bottom line was bolstered by our revenue growth and margin improvement but hampered slightly by a higher-than-expected tax rate. Net income was $29 million, and diluted EPS was $0.71 for Q1, both up meaningfully compared to last year. Healthy growth was also evident in our adjusted figures.

For the quarter, adjusted net income was $33 million, and adjusted diluted EPS was $0.81, up 33% and 31%, respectively. Now on to the balance sheet and cash flow statements. For the quarter, we collected $43 million in cash flow from operations, representing 1.5 times net income. We did not see a major delay in ability to collect cash given most of our customers permit electronic invoicing.

And our DSO level improved from last year, a quarter where we had a partial government shutdown. DSO was 64 days at quarter-end, a six-day improvement from last year. Consistent with prior communications, we distributed $13 million in dividends for the quarter. At quarter-end, we had $89 million in cash and $115 million of debt.

Our net debt position remained similar to where we stood at the end of last year. As a cautionary liquidity measure, we drew against our revolver to ensure the smooth flow of cash to fund operations as we were monitoring the payment process for potential delays. Despite the broader macro backdrop, our capital deployment strategy remains unchanged. We continue to focus on deploying capital to fund the growth of the business, maintain our quarterly dividend and accelerating growth via strategic M&A.

The M&A market has slowed as a result of the COVID pandemic disruption. With that said, we anticipate M&A activity to increase as we recover from the pandemic. We are in an excellent position to review opportunities as they arise. Our pristine balance sheet affords us great flexibility to capitalize on opportunities that fit our strategy.

Now on to our revised 2020 guidance. Compared to our previously communicated guidance, we are adjusting the ranges on revenue, adjusted net income and adjusted diluted EPS. While we have seen minimal impacts to our financial performance in Q1, we are exercising prudence in our revised view to take into account varying scenarios in the time and approach we will collectively need to get back to normal operations. We expect revenue to be between $2.35 billion and $2.45 billion, which represents 6% to 10% growth over 2019.

Our recent awards and robust backlog provide good visibility for the rest of the year. However, the variability in our guidance will be driven by a number of factors, including the time it may take to get some of our employees with part of their work week in a mission-ready state back to full-time mission support, the level of material procurements, the timing of new contract awards, the ramp-up of recent contract awards and our success in winning new and recompete business. Turning to margins, our guidance assumes an EBITDA margin range of 8.7% to 8.8% for the year. The revised margin range reflects the outperformance in the first quarter, which is being offset by the margin decreases related to the lack of fee recovery for our employees who must spend part of their work week in a mission-ready state.

However, this still represents a potential of up to 10 basis points improvement compared to last year. At the bottom line, we are expecting adjusted net income between $120.3 million and $125.2 million and an adjusted diluted EPS between $2.95 and $3.07. Underlying these guidance ranges are an effective tax rate of 25.2% and a fully diluted share count of 40.8 million shares. Note that we slightly modified our tax rate and fully diluted share count assumptions to reflect actuals observed in Q1.

Now to cash flow. We continue to expect cash flow from operations to be at least $150 million for the year. However, we expect capital expenditures to now range between 3% to 4% of revenue. The increases in capital expenditures are onetime in nature.

Our customers showed higher demand on our managed services programs to accommodate remote work for their employees. And secondly, we are accelerating facility investments to support anticipated expansion and near-term facility needs for broader workforce distribution. As discussed on our last call, longer term, we expect capital expenditures to trend lower to more normalized levels. Now Matt will speak to our defense and federal civilian business.

Matt Tait -- President, Mission Solutions and Services Group

Thanks, Judy. MSS is off to a solid start to 2020, particularly in winning new work. I'm excited to formally share with you additional details behind the $920 million five-year contract award that we briefly discussed on our last call. On this contract, ManTech will modernize ISR and electronic intelligence capabilities on the Navy's fleet of manned, unmanned and persistent surveillance maritime patrol and reconnaissance aircraft, as well as other platforms.

The breadth of the work we will be providing on this program spans cyber, model-based systems engineering, platform integration and modernization, all of which are key capability strengths for ManTech. We are excited that Naval Surface Warfare Center Crane has trusted us with this important mission and are already working tirelessly to provide exceptional performance on this new effort as we do for all our customers. Rick, over to you.

Rick Wagner -- President, Mission, Cyber and Intelligence Solutions Group

Thanks, Matt. I am pleased to report that MCIS had a good quarter as well. Our people continue to be the key to ManTech's differentiation, and their safety and well-being remains our utmost priority. As we all know, this highly skilled and highly cleared workforce is critical to national security and important to retain, so they can meet our customers' needs once this national emergency has passed.

As such, we are continuing to work closely with our government partners to ensure we strike the right balance while still delivering our important national security missions. We are thankful to our customers in providing us great flexibility through teleworking arrangements and allowing for portions of our work, where appropriate, to be conducted on an unclassified basis. We hope these structural trends continue in part long after this crisis is resolved to better facilitate the steady flow of hard-to-find, highly skilled, differentiated talent toward critical national security missions. I would note that the security clearance process is largely functional for those with existing clearances.

However, challenges exist in the processing of new clearances which may cause hiring delays. While there may be some near-term disruptions, our growth trajectory remains intact and driven largely by direct labor growth. Within MCIS and ManTech, we remain well-positioned in the short, medium and long term to support the needs of our customers. With that, let me hand the call back over to Kevin for closing remarks.

Kevin Phillips -- President and Chief Executive Officer

Thanks, Rick. In closing, let me leave you with three key thoughts before we take questions. First, ManTech is a national and homeland security company operating during a national emergency. The security and success of our nation is foundational to who we are as a business and has been for over 50 years.

During this time, we are focused on the needs of our customers, the health and well-being of our employees and maintaining a workforce critical to national security. Second, our business is strong. That includes our balance sheet, backlog, workforce and mission focus, all of which position us for future growth. Third, we have always invested with an eye for the future and the growth that it brings.

We will keep an eye toward the future while we help our customers address critical issues during this unprecedented period. The entire Mantech family offers our heartfelt grief for those who have been impacted by the COVID-19 crisis, and we, again, offer our gratitude to all who our steadfastly helping our nation and its citizens through this difficult period. With that, we are ready to take your questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question is from Edward Caso with Wells Fargo. Please go ahead.

Edward Caso -- Wells Fargo Securities -- Analyst

Great. Thanks. Congrats on the nice print. I understand – thank you.

can you hear me?

Kevin Phillips -- President and Chief Executive Officer

Yeah, we can.

Edward Caso -- Wells Fargo Securities -- Analyst

Yeah. I'm trying to understand the 3610, Section 3610 process here. How much of it is normal business? And how much are you going to have to ask for equitable adjustments down the road? That would -- that's my first question.

Kevin Phillips -- President and Chief Executive Officer

Sure. So on the services side, the vast majority of it is going to be business as usual for any amount of time after the 27th of March where our people were moved into a mission-ready state. There's a couple-of-week period before that where a little bit -- maybe one and a half months, depending on the customer set in the region, where people may have started moving into a different mission-ready state on an interim basis. For that portion of it, there may be some REA requirements.

But the vast majority of it, we will be able to bill on a regular cycle the cost for the period that they're in a mission-ready state. Does that answer your question?

Edward Caso -- Wells Fargo Securities -- Analyst

Yes. That's great. Thank you.

Judy Bjornaas -- Executive Vice President and Chief Financial Officer

Yes. I was just going to add, Ed, that I think, again, because most of our work is in the cost-plus basis at the process for us will be relatively painless to bill and recover that COVID cost. I think if you have fixed-price contracts that were impacted, that's going to be a little more difficult, and we'll probably require the REAs.

Edward Caso -- Wells Fargo Securities -- Analyst

OK, great. Just a simple one here. On the $1.1 billion in awards, is all the $920 million in that number?

Kevin Phillips -- President and Chief Executive Officer

Sorry. You were breaking up a little bit. Could you say that again?

Edward Caso -- Wells Fargo Securities -- Analyst

I'm sorry. How much of the large $900-plus-million contract is in this quarter's awards?

Kevin Phillips -- President and Chief Executive Officer

The full amount is in Q1.

Edward Caso -- Wells Fargo Securities -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Brian Kinstlinger with Alliance Global.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Great. Thanks so much. If I take the run rate of your first-quarter revenue, you're already at the high end of your guidance range. So I wonder, are you expecting fewer pass-throughs? I think you maybe talked about lower revenue maybe from programs where teleworking is not possible.

Or is it more as projects and programs like your $920 million contract will be delayed in ramping given the current situation?

Judy Bjornaas -- Executive Vice President and Chief Financial Officer

Yeah. I think it's a combination of those things, Brian. I think the bigger impact is for new business to delay. And then while we've seen good hiring to date, clearly, it's a little bit harder to get people ramped up on new contracts, so there could be some delays there and then just the usual timing of material pass-throughs.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Great. And then my follow-up would be you talked about the procurement cycle. Are you seeing procurements get canceled, where the customer says we're going to do a one-year bridge as it will be easier in this time to stick with our incumbent? I'm just wondering if that's a trend that's starting to materialize at all.

Kevin Phillips -- President and Chief Executive Officer

Brian, it's Kevin. It's very much dependent on the customer. I would say that the proposal volume and request within the vast majority of our business is continuing. If there are delays, it's more incremental.

So we're not seeing -- if anything, we're seeing them continuing to push very aggressively on a procurement process on awards with some incremental delays just based on the availability of people based on working remotely. I would say the exception to that is in the intelligence community where people physically have to be on site to be able to access the data. From the customer side, that is going to create some delays, and there might be some extensions as a result, but it's too early to tell.

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Great. Thank you.

Operator

Thank you. Our next question is from Gautam Khanna with Cowen. Please go ahead. Gautam, please check your mute button.

All right. I'm going to move to the next question from Robert Spingarn with Credit Suisse. Please go ahead.

Robert Spingarn -- Credit Suisse -- Analyst

Hi, good afternoon. Good numbers. I wanted to ask you, Kevin, you alluded or maybe somebody else alluded to some changes coming here in the early part of the second quarter. I was wondering if we could just dig a little deeper into that, how things are maybe slowing or changing as you move from Q1 to Q2.

And then I have another question after that.

Kevin Phillips -- President and Chief Executive Officer

Yes. So on the proposal volume, again, the proposal volume is very high. The timing of awards might be delayed, except for the intelligence community, where the proposal volume might slow down because the physical on presence need to do the type of work needed to continue these procurements. And generally, a vast majority of contracting officers have to get the near-term actions done to get the COVID-related charging all set up on their programs, and that could create a delay, so that's about it.

Except for the people who are working in a part-time state and some of those folks, they gradually start going back full time to work, and that's kind of the timing phase-up that Judy has built into guidance.

Robert Spingarn -- Credit Suisse -- Analyst

OK. And then just on the logistics of this, you mentioned before, obviously, some of your people are teleworking, and then some need to be on site. Is there a way to quantify? Is there a pie that we can chop up here in terms of who's eligible to telework? And then on the back of that, do you see some cost savings down the road here if, as someone said earlier, you're able to continue to do the work remotely in the future? Is there a real estate footprint opportunity or anything else that might -- that benefit you in the future?

Kevin Phillips -- President and Chief Executive Officer

So at very high level, I'll talk about exception, not norm. Less than 20% of our workforce is basically in a position where they may not be -- just based on the access restrictions, whether that's travel or clearances, may not be able to work full time. Out of that, I'd say many of those are actually working full time because of the type of work and accommodations. Everybody beyond that is working teleworkers.

Within that, we have a number of -- a group of people who are either working full time within that 20% or 30 hours a week or 20 hours a week or 10 hours a week, and those are the new baselines from which they're going to start gradually ramping back up. So it's hard to give you a headcount equivalent because it's variable. But generally, less than 20% of our workforce is in some mission-ready state for some part of their time. I hope that's helpful.

Robert Spingarn -- Credit Suisse -- Analyst

And then just on the cost side, in the future, the permanence of this.

Judy Bjornaas -- Executive Vice President and Chief Financial Officer

I'll let Rick speak to some of the activities you're seeing in his customer set. It's hard for us to know whether it's permanent just based on the variability of this. But Rick?

Rick Wagner -- President, Mission, Cyber and Intelligence Solutions Group

Yes, Kevin. So typically, the intelligence community does a lot of their work within scarce and special spaces. Being able to do teleworking really creates some opportunity for us on the side of being able to hire people at different clearance levels. I don't think you'll see like big real estate reductions or things of that nature around it.

It will just -- it will make it more efficient to do the work and could help relieve a little bit of the pressure on hiring.

Robert Spingarn -- Credit Suisse -- Analyst

OK. Thank you very much.

Operator

Thank you. Our next question is from Tobey Sommer with SunTrust.

Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst

Thanks. What changes in federal spending priorities do you anticipate at this juncture with incomplete information acknowledge that? And how do you plan on positioning the company against what could be shifting priorities, certainly as it relates to the public health?

Kevin Phillips -- President and Chief Executive Officer

Yes. So I'll speak to two parts. And then on the federal health side, I'll let Matt end on this. So generally, we see the FY '20 budget to be a good harbinger budget -- '21 budget, as well because those two-year plans are already in place.

There might be some timing as to when Congress can get to the '21 budget. If they aren't seeing anything that would say there's a redirect on the '21 budget, it's more of an additive set of requirements in response to COVID based on the emergency bills. Long term, I think that the -- it's hard to tell, but I would say that you can tell the discretionary budget within the federal government has a high demand. And sometimes when it may not be invested in, at a point in time when there's an emergency, you can see where that is.

So we'll have to see how this all plays out, just like we do for any emergency or any investment that the government has to make because they have to make hard choices as to how they need to redirect. But I would just reinforce that these events are an example when the discretionary budget that drives the decision to react at capacity to the federal government basically show the importance of it. Matt, do you want to speak to the federal health side?

Matt Tait -- President, Mission Solutions and Services Group

Yes. I mean, on the federal health side, I think this is part of the reason why we have been focused on that aspect of the business, Tobey, is we've always seen that that's going to be a need from a national security mission set perspective. So we actually are -- we feel well-positioned for where that's going to be going from a priorities perspective.

Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst

And could you elaborate on the...

Matt Tait -- President, Mission Solutions and Services Group

Am I the only one that lost Tobey? [Technical difficulty]

Operator

And our next question...

Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst

Can you hear me?

Operator

Tobey, please continue.

Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst

Oh, yeah. If I could -- thank you. Sorry about that. I was going to ask about a penchant I perceive between two comments.

One was an increased near-term investment in infrastructure and some degree of like kind of hopeful optimism that, longer term, this may change the way your customers and your own staff deliver services.

Kevin Phillips -- President and Chief Executive Officer

So it's Kevin. I'll speak to that. There are needs for distributed environments for classified work, and that's where our investments are going. There may be a potential or a shift in work toward an unclassified portion of that over time that will allow for more work to be done outside of a secured facility.

So both are in play right now that we have to deal with. One is supporting the necessary distribution of secured facilities, and the other is to allow or accommodate for a non-classified portion of work, so we can help scale that workforce as well. So it's not necessarily conflicting. It's complementary if it works to it.

Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst

Understood. Are those discussions for sort of a portion of unclassified work being done? Is that being conducted at the highest levels within the customers and with political support?

Kevin Phillips -- President and Chief Executive Officer

Those are certainly discussions that have been going on for some time. I think you will see, as part of this process, that we will ramp that up and try to work to get more.

Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst

Thank you so much.

Operator

Thank you. Our next question is from Mariana Perez Mora with Bank of America. Please go ahead.

Mariana Perez Mora -- Bank of America Merrill Lynch -- Analyst

Good afternoon, everyone. So on our defense IT services contractor mentioned a dramatic increase in our space since the beginning of March. Could you comment and give us some color on the RFP and award environment you are experiencing during the pandemic?

Kevin Phillips -- President and Chief Executive Officer

So award environment, I'll speak to the proposal volume and award environment both, and then you can follow on if I missed anything. So we have seen a significant amount of proposal requirements in the first quarter. It was very heavy, and that's reflected in our proposals outstanding. We have seen, I would say, a little bit less than average adjudication but not much, but as a company, we want a higher portion of those adjudications that came through.

So we're not really seeing a slowdown or any requirement, except for those where the governments physically cannot get in to do their job. So the demand signal is still there, but we see this as a labor workforce issue, more than an opportunity issue still, which is why we're continuing to focus on how to get the right talent speed to meet the...

Mariana Perez Mora -- Bank of America Merrill Lynch -- Analyst

Perfect. And then can you also give me some color on any benefits that the Department of Defense has given to you? Because there has been a lot in the news about the accelerated progress payments and other benefits under the CARES Act, but it's less clear how the services are being benefited from those.

Kevin Phillips -- President and Chief Executive Officer

Yes. So first of all, I think that we, as an industry, are very grateful to the government for recognizing the need for this industrial base. And the Congress, the executive branch, the services and agencies, departments have all moved at a very quick speed to be responsive to this crisis, and so we are recognizing that. The DoD and the agencies have tried to work toward accommodating an ability to push payments earlier to streamline payment processes were potentially doable to streamline award decisions because they know they have a lot of other things to do related to the COVID crisis itself.

So for us, specifically in our industry, I would say that they are more focused on protecting the workforce, maintaining the cash flow reasonably, not in advance, because most of our work doesn't require advanced payments but a reasonable cash flow. And we are making sure that we flow that down to our industrial base and subcontractors as well because it's very important that it gets to them.

Mariana Perez Mora -- Bank of America Merrill Lynch -- Analyst

Thank you very much.

Kevin Phillips -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question is from Louie DiPalma with William Blair. Please go ahead.

Louie DiPalma -- William Blair and Company -- Analyst

Kevin, Judy and Stephen, thank you for taking my questions. So there has been a lot of M&A in this government IT services space over the last three years and even the prior three months before the pandemic. Some of your peers have made scale deals, and others have made product deals. I was wondering, do you feel any need to increase ManTech's scale to counter the increased scale and the increased product capabilities of some of your competitors? You have obviously done well with your strategy of small tuck-in acquisitions.

ManTech's stock price has increased by more in 2020 than any of its peers, but at the same time, I was just wondering if you feel any need to react to your competitors on the M&A front.

Kevin Phillips -- President and Chief Executive Officer

Yes. So from an M&A standpoint, we maintain the same posture that, first of all, we want to prioritize M&A for our use of cash, but we also want to be selective because at our size and how the government procures, there are more than enough, I'd say, white space areas and capabilities that we can invest in and go after $100 million plus procurement as a prime contractor and grow our business. We have not, as a company, seen a path or a need to diversify into product or to work toward scale. There are some bids at the enterprise IT level that may restrict us in the future based on the size of those, but they may not.

So the answer -- short answer is no. Longer answer is we thought it through, and we think we're in a good position.

Louie DiPalma -- William Blair and Company -- Analyst

Great. And another one for me. Last year, you indicated that you intended to submit $10 billion in bids for calendar 2019. Can you provide the amount that you intend to submit for this year?

Kevin Phillips -- President and Chief Executive Officer

We expect the current year proposal volume to meet that number if not extend it.

Louie DiPalma -- William Blair and Company -- Analyst

OK. And final one. Last quarter, you indicated that your pipeline was greater than $20 billion. Is it still approximately at that level, even though you have $7 billion in bids outstanding?

Kevin Phillips -- President and Chief Executive Officer

Yes. It's consistent in terms of its outlook, yes.

Louie DiPalma -- William Blair and Company -- Analyst

Great. Thanks.

Operator

Thank you. Our next question is from Robert Spingarn with Credit Suisse.

Robert Spingarn -- Credit Suisse -- Analyst

I wanted to ask you a couple more things, Kevin. Just going -- finally on to Tobey's question about redirect and what I think was really looking forward to the risk of a period of budget austerity as other priorities surface here related to the COVID crisis. How do you avoid what happened a decade ago, just being surprised on the downside? And I understand that was industrywide, and it was a different set of circumstances. We were exiting a war, and we had a new president that had a different view.

But how do you protect yourself against the downside here? And does it take a change in administration for this to happen, or could we have it with the same administration?

Kevin Phillips -- President and Chief Executive Officer

And so I would say that we're much more diverse in our customer set than we were then. Our job is to support customer missions when they go up and support our customers when those missions go down as well. That said, we have a much broader customer set, a much broader set of capabilities. Our general view is that the mission-enabling needs of the technology transformation under way today may stay the same or expand, if you think about all the activities going on around needing distributed environments for communications.

So we will have to see how the federal budgets play out, but I would say that we're in a much better position from a risk mitigation standpoint based on the distribution of our customers, the distribution of work and the broad backlog we have as well.

Robert Spingarn -- Credit Suisse -- Analyst

And I think this got touched on earlier, but I figured I'd try to delve in a little bit deeper. Have you seen any early opportunities building here out of the federal government in a post pandemic effort to prepare for next time, the next pandemic, things that you could participate in given that, I think, that you bring a lot of skill sets that might be applicable in such an effort?

Matt Tait -- President, Mission Solutions and Services Group

Yes. So this is Matt. Yes, we actually are seeing opportunities and actually are supporting certain aspects of this current pandemic, so I think that's definitely an area of opportunity that we are already acting on.

Robert Spingarn -- Credit Suisse -- Analyst

Thank you.

Operator

Thank you. Our next question is from Joe DeNardi with Stifel.

Jon Ladewig -- Stifel Financial Corp. -- Analyst

Yes. This is Jon on for Joe. Kevin, we were just kind of curious. You have previously talked that 2020 would be kind of the usual year in term of recompetes.

Are you still thinking that? And what's the customer telling you in regards to some of these recompetes? Are they concerned around the risks? Or are they thinking maybe that they can perhaps extend this work and push it out into 2021? If you can give some more color on that, that would be great.

Judy Bjornaas -- Executive Vice President and Chief Financial Officer

Yeah. Jon, this is Judy. I'll give it a first crack and then if Matt or Rick want to chime in about their business areas. But in general, we Have seen some of the risks go down over the last two quarters, especially in the intel space, where they have done exactly what you've mentioned and done a number of multiyear sole-source extensions.

We still have, on the books, a number of recompetes in the second half of the year. But right now, about 90% -- a little more than 90% of the midpoint of our guidance is already in backlog. And I think, just as we said, there could be slippages from some of the new business that we were looking at. It's quite possible that there could be delays on recompetes as the government gets their feet back under them and respond kind of post pandemic and gets back to business as usual.

I don't think it would surprise us tremendously. But I don't know. Matt, you've got quite a bit of the recompete that's left. What are your customers saying about that?

Matt Tait -- President, Mission Solutions and Services Group

Yes. I think it's a mix, right? I mean, like Kevin kind of alluded to, right, there are some things that are moving in the past that where we, I'll say, normal course, but then there are certain areas where we're seeing a delay in terms of adjudications. And I think that just kind of leads to more revenue assurance.

Jon Ladewig -- Stifel Financial Corp. -- Analyst

Awesome. And then just kind of a follow-up here. When you're looking out at the current COVID-19 environment, specific to protest, are you seeing any change in companies protesting and then delays there from the GAO? Or has everybody kind of reset expectations around protesting? And are we thinking that approach? If you guys can give any color there, that would be awesome. Appreciate it.

Kevin Phillips -- President and Chief Executive Officer

No change in protest processes, timing [Inaudible]

Jon Ladewig -- Stifel Financial Corp. -- Analyst

Thank you.

Operator

Thank you. [Operator instructions] Our next question is from Tobey Sommer with SunTrust.

Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst

Thanks. So I wanted to ask a follow-up question. With respect to the potential for intelligence customers to sort of disaggregate and have some non-classified work done before the classified piece finishes off, what are the positive potential outcomes of that for the company and industry? And what are the risks, including potential margin risk, if part of it doesn't require clearances?

Kevin Phillips -- President and Chief Executive Officer

Yes. I think any movement we see in that direction will be minimal, clearly, to start. In my view, it would take a long time for the intelligence community to change that model and to do a lot of work on classified. So I think that -- I think the risk part is fairly small.

And as I said before, I think the opportunity side is really on the ability to bring people into the intelligence community, first in an unclassified manner, and then upgrade their clearances and move them into the full capacity. And so that's the most promising thing that I see.

Stephen Vather -- Vice President, Corporate Development, and Investor Relations

Carmen, it appears that we have no -- go ahead, Carmen.

Operator

Sorry. I'm not showing any questions, sir.

Stephen Vather -- Vice President, Corporate Development, and Investor Relations

Fantastic. OK. As usual, members of our senior team will be available for any follow-up questions. Thank you all for your participation on today's call and your interest in ManTech.

Have a good evening, and please stay safe.

Operator

[Operator signoff]

Duration: 50 minutes

Call participants:

Stephen Vather -- Vice President, Corporate Development, and Investor Relations

Kevin Phillips -- President and Chief Executive Officer

Judy Bjornaas -- Executive Vice President and Chief Financial Officer

Matt Tait -- President, Mission Solutions and Services Group

Rick Wagner -- President, Mission, Cyber and Intelligence Solutions Group

Edward Caso -- Wells Fargo Securities -- Analyst

Brian Kinstlinger -- Alliance Global Partners -- Analyst

Robert Spingarn -- Credit Suisse -- Analyst

Tobey Sommer -- SunTrust Robinson Humphrey -- Analyst

Mariana Perez Mora -- Bank of America Merrill Lynch -- Analyst

Louie DiPalma -- William Blair and Company -- Analyst

Jon Ladewig -- Stifel Financial Corp. -- Analyst

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